Internal Control Concepts Quiz

The system of internal control may be defined as the plan of organization and all the methods and procedures adopted by the management of an entity to assist in achieving management’s objective of ensuring, as far as practicable, the orderly and efficient conduct of its business, including adherence to management policies, the safeguarding of assets, prevention and detection of fraud and error, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information.

The objectives of internal control in relation to an accounting system include ensuring the orderly and efficient conduct of business, adherence to management policies, safeguarding of assets, prevention and detection of fraud and error, accuracy and completeness of accounting records, and timely preparation of reliable financial information.

The system of internal control extends beyond matters directly related to the functions of the accounting system, including the objective of determining whether other internal controls are well designed and properly operated through the internal audit function.

The internal audit function constitutes a separate component of internal control with the objective of determining whether other internal controls are well designed and properly operated.

The primary objective of internal control is to assist in achieving management’s objective of ensuring the orderly and efficient conduct of business, adherence to management policies, safeguarding of assets, prevention and detection of fraud and error, accuracy and completeness of accounting records, and timely preparation of reliable financial information.